UBS profits top estimates
ZURICH, Switzerland (Reuters) -- Bank UBS posted its best quarterly profit in over three years on Tuesday and said it will pay a record dividend as improved markets and cost cuts helped it beat even the most optimistic market expectations.
Buoyed by gains in its core business of managing money for the rich as well as its growing investment banking franchise, the Swiss group said it would hand back up to six billion Swiss francs ($4.9 billion) to shareholders via share buybacks.
The world's largest asset manager also said it would step up the pace of acquisitions, but continue to shun large mergers.
"We have started the year very well, the financial markets look favorable since the beginning of the year, and we do feel that all our businesses are firing on all cylinders,'' Chief Executive Peter Muffling told Reuters in an interview.
Net profit in the fourth quarter rose to 1.86 billion francs, up 11 percent on the third quarter, bringing 2003 net profit to 6.39 billion -- its second best yearly result ever.
Analysts in a Reuters poll had forecast a fourth-quarter net profit of 1.55 billion francs, compared with a net loss of 101 million in the same quarter a year ago due to one-off factors.
"The results are very good. UBS seems to beat expectations every quarter,'' said fund manager Helmut Hipper at Union Investment in Frankfurt, which rates UBS shares "overweight.''
UBS's results confirm the return of near-record profits for many U.S. and European banks, which have ridden market rises higher and posted earnings that in many cases have only been beaten by the boom years that ended in 2000.
Building market share
UBS said it had gained market share in all businesses. A visibly confident Wuffli said the bank now ranked number four globally in investment banking and had won market share on Wall Street, traditionally dominated by a handful of U.S. firms.
"We can compete with anybody on Wall Street,'' he said.
Analyst said the results underscored that UBS had finally shed its image as a safe, if somewhat boring, banking play in down markets that is unlikely to profit from an upturn.
"If anybody is in a position to manage for growth, it is UBS, which has come out of a market slump not just intact but by building market share,'' said ABN AMRO analyst Kinner Lakhani.
UBS's results set the bar for local rival Credit Suisse, due to report on Thursday, which had traditionally been seen as a more aggressive recovery play but lost some of its shine with a sharp fall in trading income in the third quarter.
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